Correlation Between Liberty Broadband and Enersys

Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Enersys at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Liberty Broadband and Enersys into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Liberty Broadband Corp and Enersys, you can compare the effects of market volatilities on Liberty Broadband and Enersys and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Liberty Broadband with a short position of Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Enersys.

Diversification Opportunities for Liberty Broadband and Enersys

0.13

Correlation Coefficient

Liberty Broadband  Enersys

Average diversification

The 3 months correlation between Liberty and Enersys is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Corp and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys and Liberty Broadband is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Liberty Broadband Corp are associated (or correlated) with Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Enersys go up and down completely randomly.

Pair Corralation between Liberty Broadband and Enersys

Assuming the 90 days horizon Liberty Broadband Corp is expected to generate 0.29 times more return on investment than Enersys. However, Liberty Broadband Corp is 3.46 times less risky than Enersys. It trades about 0.18 of its potential returns per unit of risk. Enersys is currently generating about -0.16 per unit of risk. If you would invest  2,380  in Liberty Broadband Corp on September 12, 2024 and sell it today you would earn a total of  35.00  from holding Liberty Broadband Corp or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Liberty Broadband Corp  vs.  Enersys

Liberty Broadband Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Liberty Broadband is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Liberty Broadband and Enersys

The main advantage of trading using opposite Liberty Broadband and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Enersys can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Enersys will offset losses from the drop in Enersys' long position.

The idea behind Liberty Broadband Corp and Enersys pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.